In its Department R, Recyclers, Inc., processes donated scrap cloth into towels
ID: 2341969 • Letter: I
Question
In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sels the products at cost. The direct materials costs are zero, but the operation requires the use of direct labor and overhead. The company uses a process costing system and tracks the processing volume and costs incurred in each period. At the start of the current period, 300 towels were in process and were 60 percent complete. The costs incurred were $576 During the month, costs of $10,8D0 were incurred, 2,700 towels were started, and 150 towels were still in process at the end of the month. At the end of the month, the towels were 20 percent complete Required: a. Prepare a production cost report; the company uses FIFO process costing. RECYCLERS, INC Production Cost Report -FIFO of Production Units Compute Equivalent Units Physical Units Conversion Units to be accounted for. Beginning WIP inventory Units started this period Tolal units to be accounted for 300 2,700 3,000 Units accounted for Units completed and transterred out: From beginning inventory Started and completed cumrently Units in ending WIP invenbory Tolal units aecounted farExplanation / Answer
FIFO method Beggining units 300 Transferred out 2,850 Started into production 2700 Ending units 150 3000 3000 Equivalent units Conversion Beginning units 300 Completion in current period 40% A 120 Units started and completed 2550 Completion 100% B 2550 Ending Units 150 Completion 20% C 30 Total units A+B+C 2700 Cost per equivalent units Per unit cost Cost Total units Per unit cost Conversion cost 10800 2700 4.00 Cost of goods sold convertion cost Beginning work in progress A 576 Beginning inventory completed Completion 40% Per unit cost 4.00 Units 300 Total cost B 480 Units started and completed Completion 100% Per unit cost 4.00 Units 2550 Total cost C 10200 Total cost A+B+C 11256 Ending work in progress Completion 20% Per unit cost 4.00 Units 150 Total cost 120 Total cost accounted for 11376 Work in progress Beginning inventory Conversion cost 576 11256 Transfer to finished goods This period cost Conversion cost 10800 Ending balance 120 finished goods inventory Beginning 0 Transfer from work in progress 11256 Ending balance 11256 Various payable 10800 Current period cost Ending balance 10800